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THE NETHERLANDS: Annual Update – Expected labour law changes in 2016

Payment of salary

Payment of salary: With effect from January 1, 2016 employers must (a) pay employee salaries by bank transfer; and (b) specify on salary statements for all (relevant) employees which part of the salary consists of re-imbursement of employee expenses, together with the detail of those expenses.Action required: (1) Put in place a process to pay all salaries by bank transfer. (2) Put in place a process to specify on relevant employee salary statements the required information about employee expenses.

Working after retirement age

New rules for employees working after the statutory retirement age: With effect from January 1, 2016 an employee working after their relevant statutory retirement age will only be entitled to a maximum of 6 weeks continued payment of salary by the employer during illness, reduced from 104 weeks. Also, the prohibition against contract termination during illness will be decreased from 104 weeks maximum to 6 weeks. However, during the first two years there are transition provisions so that the abovementioned periods of 6 weeks will be 13 weeks.

Furthermore, if an employer wants to employ someone after their statutory retirement age, then it is possible to conclude a maximum amount of 6 consecutive (previously 3) temporary employment agreements for a maximum period of 48 (previously 24) months, after which the final employment agreement will automatically convert into a permanent employment agreement. Finally, the statutory notice period for such post retirement employees is fixed at 1 month, irrespective of the duration of the employment.Action required: No specific actions are required. Please note that it will become more attractive for an employer to hire an employee who has already reached their statutory retirement age.

Unemployment benefits

Reduction of unemployment benefits: With effect from January 1, 2016 the maximum time during which a person is entitled to unemployment benefits will be gradually decreased from 38 to 24 months.Action required: The employer should take into account that this change might lead to the employee demanding a higher severance payment from the employer in negotiations on a termination agreement.

Abolition of ‘no work, no pay’ for on call contracts

The principle of ‘no work, no pay’ is to be abolished: With likely effect from April 1, 2016 an employer will be obliged to pay wages even if the employee has not performed the agreed-upon work, unless this should reasonably be for the account of the employee. In the situation where an employee does not perform the agreed-upon work, the employer has to state (and, if necessary, prove) that this is due to a circumstance that is the responsibility of the employee, if the employer is not to pay the employee’s salary for this period. Therefore it is likely that more often the employer will have to pay salary if an employee has not worked. However, during the first 26 weeks of employment, it will be possible to exclude the new payment rule by including a clause in the employment contract agreement to that effect. If such a clause is included, the employer will not have to pay the employee salary if the employee did not perform the agreed-upon work.Action required: (1) Stipulate in relevant employment agreements that during the first 26 weeks of employment, the employee is not entitled to salary if the employee did not perform the agreed-upon work. (2) Consider not using on-call contracts (in Dutch: oproepovereenkomsten) with a duration of more than 26 weeks.